Correlation Between Owl Rock and American Express

Can any of the company-specific risk be diversified away by investing in both Owl Rock and American Express at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Owl Rock and American Express into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Owl Rock Capital and American Express, you can compare the effects of market volatilities on Owl Rock and American Express and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Owl Rock with a short position of American Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of Owl Rock and American Express.

Diversification Opportunities for Owl Rock and American Express

0.86

Correlation Coefficient

Owl Rock  American Express

Very poor diversification

The 3 months correlation between Owl and American is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Owl Rock Capital and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and Owl Rock is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Owl Rock Capital are associated (or correlated) with American Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Express has no effect on the direction of Owl Rock i.e., Owl Rock and American Express go up and down completely randomly.

Pair Corralation between Owl Rock and American Express

If you would invest  28,555  in American Express on September 20, 2024 and sell it today you would earn a total of  753.00  from holding American Express or generate 2.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	4.55%
Values	Daily Returns

Owl Rock Capital  vs.  American Express

Owl Rock Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Owl Rock Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Owl Rock is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

American Express

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Express are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, American Express may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Owl Rock and American Express

The main advantage of trading using opposite Owl Rock and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Owl Rock position performs unexpectedly, American Express can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in American Express will offset losses from the drop in American Express' long position.

The idea behind Owl Rock Capital and American Express pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamental Analysis module to view fundamental data based on most recent published financial statements.